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By the time of Yellen’s speech on Friday, five other policymakers had also flagged a March rate hike. Traders of interest rate futures contracts placed similar bets. Investors were aware that improving U.S. economic data, a stable global economy, a booming U.S. stock market and easy financial conditions, provided some justification for further Fed interest rates rises this year. The result: over the course of four days Fed policymakers successfully shifted market expectations for perhaps only two rate rises this year to fully expecting three, and perhaps more, according to Reuters data. The U.S. central bank prefers to have market expectations aligned with its own policy plans.

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Yellen signals likely rate hike at March meeting

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Several other Fed officials in recent days have indicated the Fed’s policymaking committee is likely to raise its benchmark short-term rate at a March 14-15 meeting. She also reiterated that the pace of rate increases is likely to speed up over the next few years. Yellen also said Friday the Fed is likely to raise rates more rapidly over the next few years than it did in 2015 and 2016. (Photo: MICHAEL REYNOLDS, EPA)Federal Reserve Chair Janet Yellen signaled Friday that an interest rate hike is likely later this month, the latest in a flurry of recent statements by Fed officials that suggest a move is all but certain. Yellen cited sluggish productivity growth and an aging population as chief factors that have slowed economic growth and called for.more gradual rate hikes.

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On Wednesday, Bloomberg’s World Interest Rate Probability reflected a 100% probability of a hike next week. Futures traders are fully convinced that the Federal Reserve will raise interest rates at its March 14-15 meeting. However, expectations began to rise as several Fed officials, including Chair Janet Yellen, spoke out in support of raising interest rates sooner rather than later. The Federal Open Market Committee is expected to increase its benchmark fed funds rate by 25 basis points to a range of 0.75%-1%. The unemployment rate recently fell to a historic low of 4.8%, convincing Fed officials that the economy is near full employment.